Calculating ERP Return on Investment (ROI) and Avoiding Hidden Costs

ERP costs and value shouldn’t be a mystery. As ERP is a significant investment that touches every part of your business, you can’t afford to have cost overruns, hidden fees, or other unforeseen expenses that derail your project. You need to justify the project beforehand, and you need to get honest answers regarding cost, time, and return on investment.

To answer both of these questions, our friends over at Acumatica have put together two guides to help you justify your ERP project in real, monetary terms, calculate the overall ROI of ERP, and avoid any of the hidden costs associated with an ERP implementation project.

ERP Project Justification (ROI)

Any good project needs to be able to pay for itself. While calculating the direct and indirect costs of the project may pose a challenge, doing so can help you to stack up different options and come out in the black after everything is accounted for. The Acumatica Guide to Justifying an ERP Purchase can help you weigh your options, calculating not only the costs but the benefits to your business as well—including cost savings, cost avoidance, increased revenue and higher profit.

Among the other benefits contributing to your return on an ERP investment:

Greater coordination of resources to deliver the right products in the right quantities at the right time

Greater visibility to demand and schedules

Better management of workflow and production schedules

Closer management of materials, equipment, and personnel

There are indirect benefits, too, which might prove unexpectedly valuable to your business:

Increased productivity from employee job satisfaction

Reliable processing and fewer surprises due to stable scheduling

Improved marketing and product deployment because of market analysis and information

Seven Hidden Costs of an ERP Implementation to Watch For

You have a quote from your new ERP provider, so you know the costs for software, hardware, implementation assistance, and training. Nevertheless, many companies are surprised with some additional costs that were not anticipated – and therefore not included in your plan and budget.

Time: It takes time to plan, implement, understand, and use new solutions.

Training: Existing employees will need to be trained or retrained in system use, development, and documentation.

Tailoring: As your business changes, so will the way ERP can help streamline your business processes, and customization can require additional time and retraining.

Though this is not a definitive guide—and you still need to look for other unexpected costs—this does make known three of the less obvious costs that may get overlooked during the tumultuous time that is the ERP selection and implementation process.